CMS Issues More Draft Guidance on Medicare Prescription Payment Plan

The initiative aims to reduce costly up-front, out-of-pocket prescription drugs costs for seniors.

The Centers for Medicare & Medicaid Services this month issued a second round of draft guidance for the Medicare Prescription Payment Plan and its requirements for organizations participating in Part D.

The draft guidance for the plan, which launches in 2025, is mandated by the Inflation Reduction Act, and aims to reduce the pricey upfront out-of-pocket prescription drug costs for seniors and disabled people enrolled in Part D by allowing them to spread costs over a year rather than in one lump sum. 

"Too many seniors and people with disabilities can't afford to fill their prescriptions at the pharmacy – and that is unacceptable," Health and Human Services Secretary Xavier Becerra says.

"In addition to adding flexibility through a payment plan, the law cuts drug costs through provisions such as caps on out-of-pocket costs and the cost of insulin, and a mandate on drug companies to pay a rebate to Medicare if they raise prices faster than inflation," Becerra says.

The second draft guidance details the outreach, education, and communication requirements for organizations to ensure that Medicare Part D enrollees are aware of the MPPP.

CMS is also planning a national education and outreach initiative targeting pharmacies, providers, and beneficiary advocates, to acquaint them with the program and ensure that they have the needed support and materials.

Meena Seshamani, MD, PhD, CMS deputy administrator and director of the Center for Medicare, says MPPP "helps alleviate cash flow issues for people who face high out-of-pocket costs early in the year that may prevent these individuals from taking a drug that could keep them healthy."

"The draft guidance we have released is a blueprint to help operationalize this program to ensure both healthcare organizations and people with Medicare are empowered and educated," Seshamani says. "That way, people in Medicare can make the best choices for their health and financial needs."

On Jan. 1, 2024, the IRA expanded eligibility for Part D's Low-Income Subsidy program – also known as "Extra Help." So far, the program has enrolled about 300,000 low-income people, and CMS estimates that another 3 million people are eligible but have yet to enroll.

Before finalizing the guidance, CMS is soliciting public feedback in a comment period that expires on March 16. Comments should be sent to PartDPaymentPolicy@cms.hhs.gov with the following subject line: "Medicare Prescription Payment Plan Guidance – Part Two."